dsmil wrote: ↑Thu Jan 07, 2021 10:28 am
Our water and sewer lines both needed replacement in the short 5 year period that we owned our townhouse, which was built in 1994. $7k later, I now pay the $10 per month on my current (older) home to cover this.
On one hand, sure one can self insure. The problem is statistically not very likely to happen. I read the OP link, and I suspect what is missing on the statistics is that probably very few people actually pull a permit when things like a sewer line or water line is replaced. I've personally known a few people in different states that have done one or the other, and no one pulled any permits although technically they were probably required.
Additionally, the OP link author acts like it's not going to cost thousands of dollars to have a sewer line replaced. Good luck on that. Water line, same thing, good luck for most people needing a trench dug and line replaced. I had a main line small water leak that was a minor repair at $600.
I did the math and decided to get this for some SFR rental properties. I think the coverage was up to $4000 repairs and premium of $60/year, so I figured $4000/$60 (yr) = 66.67 yrs of coverage until I hit the $4000 "payback". Ask yourself, will the problem possibly happen in the next 66 yrs? Yes, premium will go up, but so will cost to repair with inflation. Even my small water line repair of $600 would have been 10 yrs of the $60 premium.
Figure the $60/yr is a rental expense and while I could pay a few thousand out of pocket to repair, I'd rather pay a $60 essentially tax deductible expense to not worry about having that repair expense.
But I can see if someone doesn't want to worry about paying this as the odds are low that it will happen. It won't bankrupt most people.
I suspect municipalities promote this insurance for a couple reasons:
a) As a PR thing to let homeowners know that the city is not responsible for something that most homeowner's will think the city is responsible.
b) It will help the typical homeowner who lives paycheck to paycheck pay for something they did not plan ahead with any emergency fund.